The Leasehold Reform Act 1967 allowed tenants with qualifying leases (ie originally granted for at least 21 years) to enfranchise – usually by acquiring the freehold, on advantageous terms. But they can only do this if the property is a “house”.
This is defined by s2(1) as including
any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes…
Now originally there were extensive residence and other qualifications but most of these have been removed and most tenants who have owned the lease for at least 2 years will qualify, including companies. The main remaining exclusion is for tenants with business leases under Part II Landlord & Tenant Act 1954 who do not reside on the premises.
Tenants discovered that if you have a house that is – say – converted into a shop with flats over it, and provided it has been leased as a whole, with sub-leases for the components, then the head lessee can enfranchise. Landlords like to keep their properties and have been fighting this tooth and nail, especially in central London where the property values make the cost of going all the way legally seem worthwhile. And if you couldn’t turf the claim out on some technicality about the form of the notice required then arguing that the place isn’t a house seemed the best way to do so.
But the landlords haven’t been doing very well. The courts over the years have held that all sorts of things that you wouldn’t expect are in fact houses, or at any rate, can “reasonably be called houses. ” In July 2012 the Supreme Court will be deciding if:
- 3 terraced houses converted into self-catering accommodation for visitors; and
- an 18th century Mayfair house, now used almost entirely for offices, as required by the terms of the lease
can be called houses as the CA held – Day v Hosebay , and Howard de Walden v Lexgeorge EWCA Civ 748.
The problem is a conflict between two earlier cases. In Boss Holdings v Grosvenor 1WLR289 the HL held that once a building has been constructed as a house and retained its external appearance then the fact that you couldn’t live there didn’t prevent it being a house. But in Prospect Holdings v Grosvenor  1WLR1313 the CA decided that a house that had been let on terms allowing residential use only for 11% and with the rest being commercial you could not reasonably call the thing a house any more.
There is now another case that might join them – Magnohard v Cadogan Estates EWCA Civ 594. Here a building in Holbein Place, in central London , was built in 1888 as 6 flats with shops under them. It is now much the same, although there are now 8 flats. The County Court Judge said that the thing was a block of flats and couldn’t be called a house , and the CA agreed. But they suggested that the losing tenants might like to ask the SC for permission to be joined in the Hosebay appeal.
So we should have an authoritative decision soon. On the meaning of what Lewison LJ called “one of the 200 most frequently used words in the English language and one of the 20 most frequently used nouns” – the word “house”.